Presentation made by Michele Riccardi & Francesco Calderoni, Transcrime‌ at the 3rd meeting of the OECD Task Force on Charting Illicit Trade - OECD, Paris, 30-31 March 2015‌ For more information see http://www.oecd.org/gov/risk/charting-illicit-trade-third-task-force-meeting.htm

1. Transcrime – Joint Research Centre on Transnational Crime
Università Cattolica del Sacro Cuore | Università degli studi di Trento
www.transcrime.it
Michele Riccardi & Francesco Calderoni
Organized Crime and
Illicit Trade in Europe

2. 2
Transcrime’s research agenda:
• Estimating organised crime & illicit trade
• Mapping routes & flows
• Identifying actors & modus operandi
Key targets:
• Developing innovative methodologies
• Improving policies with a focus on the
reduction of opportunities
Transcrime on O.C. and illicit trade

3. 3
RECENT RESULTS ON
O.C. AND ILLICIT TRADE IN EUROPE

4. The size of the illicit trade in Europe
4
• Project OCP – Organised Crime Portfolio
• Study of the economics of OC in Europe
• Starting point: where do OC proceeds come from?
 Analysis of illicit markets:
• Revenues
• Impact on EU MS
• OC actors involved
• Emerging trends
• High-risk areas and markets

5. 5
• Different markets  Different methodologies
• Lack of data  wide range of sources and information
• Data on consumption
• Data on prices of both illicit and legal goods
• Data on revenues of legal sectors/markets
• Data on seizures
• Qualitative information from:
• Judicial files
• LEA/FIU/Customs reports
• Other reports
• Further details: Final report and Methodological annex
(www.ocportfolio.eu)
Methodology

6. Estimates of illicit markets in Europe
6
Source: Transcrime-Project OCP estimates. In italics estimates by other authors.
www.ocportfolio.eu
Illicit revenues in the EU per year (billion euro)
Illicit market Revenues
Illicit drugs 27.7
Heroin 8.0
Cocaine 6.8
Cannabis 6.7
Amphetamines 2.8
Ecstasy 3.5
Illicit trafficking in firerarms (ITF) 0.4
IIllicit trade in tobacco products (ITTP) 9.4
Counterfeiting 42.7
VAT carousel fraud 29.3
Cargo theft 0.42
TOTAL 109.9

7. 7
Estimates of illicit markets in Europe
Absolute value - million euro
Source: Transcrime – Project OCP (www.ocportfolio.eu)

8. 8
Estimates of illicit markets in Europe
% of GDP 2010
Source: Transcrime – Project OCP (www.ocportfolio.eu)

9. • Shift of OCGs to new profitable activities, e.g.:
• Fraud
• Organised theft (e.g. of medicines, metal, fuel, car parts)
• Involvement of legitimate businesses, e.g.:
• In fraud schemes
• As fronts for illicit trade
• To ‘launder’ stolen products
• New products in the twilight zone between licit and
illicit (e.g. illicit whites or firearm replicas)
9
Main findings

10. Policy implications
10
• Improved tracing of the origin of illicit investment
(Follow the money)
• Clearer assessment of the impact of proceeds of
crime on the legal economy
• Better identification of the regions suffering the
highest harm
• Identification of opportunities offered by emerging
markets to
• reduce opportunities (e.g. better regulation, controls)
• focus prevention and law enforcement (in time & space)

11. WHY WE NEED TO BE CRIME SPECIFIC?
INNOVATIVE METHODOLOGIES FOR CHARTING
THE ILLICIT CIGARETTE MARKET
11

12. 12
The European Outlook on the ITTP
Goal
Provide data & analyses for reducing the opportunities for illicit
tobacco
Innovative approach:
• Estimating the size & products of the ITTP at the subnational level
• Mapping the flows of the ITTP
• Exploring the actors and modus operandi
• Analyzing the law enforcement actions
• Covering the 2006-2013 period
Project co-financed by Transcrime and PMI, 2014
Full report at http://www.transcrime.it/pubblicazioni/european-outlook/

13. 13
Methodology
Estimates of the size, products and proceeds of illicit cigarettes
• National estimates from KPMG Project Sun
• Disaggregation at the subnational level according to:
• Smoking prevalence
• Empty pack surveys data
• Despite the limitations, best available data
Flows, Actors & Law enforcement actions
• Content analysis of grey literature & open sources (approx. 6,500
sources collected)
• First time comprehensive analysis
Full details in the methodological annex at http://www.transcrime.it/wp-
content/uploads/2015/01/Methodological-Annex.pdf

14. 14
The size of the illicit cigarette market
Midpoint estimates, million € (2013)
Proceeds between €7.8
billion and €10.5 billion
per year (2006-2013)
Comparable to the cocaine
or heroin markets
Source: Transcrime, The European Outlook on the ITTP, 2015

15. 15
Source: Transcrime estimates/elaborations
Prevalence of illicit cigarettes
million sticks per 100,000 inh.
2006 2007 2008 2009 2010 2011 2012 2013

16. 16
Source: Transcrime estimates/elaborations
Prevalence of illicit cigarettes
million sticks per 100,000 inh.
2006 2007 2008 2009 2010 2011 2012 2013

17. 17
Source: Transcrime estimates/elaborations
Prevalence of illicit cigarettes
million sticks per 100,000 inh.
2006 2007 2008 2009 2010 2011 2012 2013

18. 18
Source: Transcrime estimates/elaborations
Prevalence of illicit cigarettes
million sticks per 100,000 inh.
2006 2007 2008 2009 2010 2011 2012 2013

19. 19
Source: Transcrime estimates/elaborations
Prevalence of illicit cigarettes
million sticks per 100,000 inh.
2006 2007 2008 2009 2010 2011 2012 2013

20. 20
Source: Transcrime estimates/elaborations
Prevalence of illicit cigarettes
million sticks per 100,000 inh.
2006 2007 2008 2009 2010 2011 2012 2013

21. 21
Source: Transcrime estimates/elaborations
Prevalence of illicit cigarettes
million sticks per 100,000 inh.
2006 2007 2008 2009 2010 2011 2012 2013

22. 22
Source: Transcrime estimates/elaborations
Prevalence of illicit cigarettes
million sticks per 100,000 inh.
2006 2007 2008 2009 2010 2011 2012 2013

23. 23
The products
% the illicit cigarette markets (2013)
Illicit whites
Counterfeit Other illicit
Source: Transcrime, The European Outlook on the ITTP, 2015

24. The flows by frequency
number of cases reported (2010-2013)
• Geographic proximity between starting and ending points
• Flows from countries producing illicit whites and counterfeits
24
Source: Transcrime, The European Outlook on the ITTP, 2015

25. Large-scale actors (23.0%) 
the largest ITTP share (94.8%)
Small-scale actors (51.4%) 
the smallest ITTP share (1.2%)
25
Number of actors and share of illicit
cigarettes by type of actors
Actors N=7,398, seizures N=6.8bn sticks. 2010-2013
Source: Transcrime, The European Outlook on the ITTP, 2015
The actors
Large, medium and small scale actors

26. Increase in the scale
of crime = increase in
the age of actors
Large-scale ITTP:
senior and more
experienced criminals
26
Age of actors per type
(N=1,994) (2010-2013)
Source: Transcrime, The European Outlook on the ITTP, 2015
The actors
Age profile

27. Cigarettes seized and share of seizures out of the total illicit cigarettes
• Significant challenge for law enforcement
• Seizures = approx. 7% of the illicit market
• Weak deterrence of traditional law enforcement approaches
27
Source: Transcrime, The European Outlook on the ITTP, 2015
EU, bn sticks, % (2007–2013)
The law enforcement actions

28. Conclusions
The future challenges for charting illicit trade
• Addressing measurement issues  better data collection
• Moving beyond national estimations  subnational level
• Ensuring continuity  yearly estimates
• Distinguishing by types of products  proper classification
How these findings affect policies?
• Improving prevention  reduction of opportunities
• Improving law enforcement action  focus on large-scale actors
• Improving regulation  prevention of asymmetries
28

29. Transcrime – Joint Research Centre on Transnational Crime
Università Cattolica del Sacro Cuore | Università degli studi di Trento
www.transcrime.it
Michele Riccardi & Francesco Calderoni
Organized Crime and
Illicit Trade in Europe